If you’re like many Australians with less complicated financial situations and fewer assets to invest in, paying a full service financial adviser an annual average fee of between $3,500 and $5,000 to create and maintain a full-blown financial plan would simply be overkill.
However, that doesn’t mean you wouldn’t benefit from some specific financial advice.
If that sounds like you, you’re not alone.
Due to an explosion of digital information sources and advice, ‘DYOR’ (do your own research) has become popular with Macquarie data suggesting that 52% of investors are now self-directed.
Following the Hayne royal commission into the financial planning sector in 2017, former Future Fund board member Brian Watson estimated that around 1.1 million people – some of whom are currently advised by a human – could be best suited to receive what’s called roboadvice.
Fast forward eight years, and even full service advice firms and using AI enhanced roboadvice to automate parts of their business without requiring human intervention.
Many automated tools advice professionals use are also at your fingertips online.
What is roboadvice?
If you’re new to roboadvice, what it really offers is countless algorithm-driven and digitally-enabled education and research tools, many of which are free to access online.
For example, most super funds now offer members a range of digital financial advice tools, and you can find out what your fund has available on their website and platform.
What may surprise you about roboadvice is that most offerings in this space deliver returns similar to those of traditional investment vehicles like stocks or mutual funds.
Generally, these returns range from 6-8% annually for a balanced portfolio, with some higher-risk portfolios offering up to 10%.
However, this depends on the type of investment you make and how much risk you’re willing to take.
Roboadvice tools
There are roboadvice solution covering a plethora of financial needs.
For example, while simpler applications include online calculators, at the other extreme there’s Supered which helps super fund members plan for their retirement, through affordable online advice solutions.
At the other end of the roboadvice spectrum there’s Mapmyplan, a free website to help you understand where you are now, where you want to be and how to get there, along with your own financial road map.
There’s also another layer of roboadvice that extends well beyond simply accessing online tools.
What we’re talking about are actual roboadvisers who can provide a low-cost alternative for Next Gen investors or any Australians trying to acquire and increase their modest savings or assets over time.
Admittedly, you’ll get different levels of service from a roboadviser than a full service financial planner.
However this is exactly why they were established.
No fuss - low cost advice
Admittedly, while you may not have access to the actual ‘human contact’ provided by traditional advisers, roboadvice is automated by a computer instead of a human using your details.
However, a lot of more generic financial advice doesn’t require human intervention, and this is reflected in the fees.
Roboadviser fees tend to range from 0.25 to 0.89% of assets under management (AUM), substantially lower than the 1 and 2%-plus charged by traditional advisers.
But that doesn’t mean real experts aren’t operating behind the scenes.
In light of the growth of roboadvice in Australia, Azzet went in search of the key players; here’s what we found.
Sixpark
One of the earliest entrants into the local roboadviser space was the independently-owned investment platform Sixpark.
A hybrid between sophisticated investing and automation, Sixpark typically attracts those with smaller amounts to invest.
The platform leverages smart technology and expert guidance to deliver higher investment returns.
With Six Park, users can affordably access diversified investment opportunities.
For example, the investing platform offers around 10 portfolios, with investments across eight asset classes including Australian and international shares, infrastructure, bonds and property.
Unlike more vanilla-favoured roboadvice, the platform also has a team of professionals who provide support and guidance to help users make sound financial decisions.
Stockspot
Beyond Sixpark, there’s Australia’s fastest-growing and largest robo-advice service Stockspot.
With assets under management (AUM) now surpassing $800 million, across 14,000-plus clients, Stockspot offers Australians with as little as $2000 a personalised portfolio recommendation that can be updated as circumstances change.
ETFs (exchange traded funds) are Stockspot’s primary investment tool and late last year the roboadviser launched its first-ever ‘ETF-only’ superannuation product.
What else is on offer?
There are countless other popular roboadvice tools and apps. Here's a handful to check out:
Quietgrowth: Low-cost provider of automated investment management, and digital financial advice.
The company claims to be the sole managed discretionary account (MDA) Roboadviser in Australia.
You’ll need a minimum account balance of $2000.
Its fees start from a yearly 0.4%.
InvestSMART: Is a popular source for investment research and tools for investors, including its free portfolio manager, and has a suite of low-cost investment products like ETFs.
Fees start at $99.
Raiz Invest (ASX: RZI): Formerly Acorns, Raiz is a low-fee, web and app-enabled micro-investment platform that allows you to start investing directly (with $5) in an index portfolio of Australian and some global stocks.
Spaceship Voyager: Spaceship Voyager, a roboadviser highly favoured in Australia, caters for both novices and seasoned investors.
Though it is a micro-investing platform, it invests in global business giants through five of our professionally-managed portfolios (instead of ETFs).
Since its inception in 2018, Spaceship Voyager has gained huge popularity and boasts over 175,000 investors across the globe.
Sharesies: With over 320,000 investors and $1 billion in assets under management, Sharesies is a micro-investing platform that enables users to invest on the NZ Exchange (NZX), the ASX, Nasdaq, New York Stock Exchange and the Chicago Board Options Exchange.
Additionally, the platform allows investment in ETFs and provides access to a diverse range of assets simultaneously.
SoFi Automated Investing: Purports to offer a wide range of features that make it stand out from other roboadvisers.
However, while Australian investors may be able to access this platform locally, it does not hold an Australian financial services licence or Australian credit licence from ASIC and is not authorised by a licensee.
This article does not constitute financial or product advice. You should consider independent advice before making financial decisions.
